Can you Pay a Credit Card with a Credit Card?

A credit card is designed to help you in an emergency, to give you options when there are none. But what happens if you have a maxed-out credit card in one hand and an empty card in the other, can you use one credit card to pay off the other and, more importantly, should you?

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The short answer is yes and… probably not. However, there is a better option available and it’s actually one of the best ways to clear a credit card balance.

Options for Paying Credit Card Bill with Another Card

There are three ways you can clear a credit card bill using another credit card. The first two options are nothing short of terrible and are likely to cause more issues than they fix. The third is really the only one you should consider, but before we get to that option, let’s get the bad ones out of the way.

Cash Advance and Convenience Checks

Credit card companies won’t let you pay off one credit card with another, at least not in that way. However, you can get around this by using convenience checks or a cash advance. The former is sent by your creditor for you to make a deposit into your checking account; the latter is used to withdraw cash. 

Technically, you can get cash from your credit card, put this into your checking account, and then use that money to clear your credit card debt.

But, as mentioned above, this is a bad idea. Cash advance fees can be enormous and if you’re moving large sums of money and being charged a high fee for doing so, you could be seriously out of pocket. Luckily, there is a better alternative.

Using a Balance Transfer

A balance transfer is the act of moving a credit card balance from one or more cards to another. There are specific balance transfer credit cards designed to help you with this process and all come with an introductory period where you’re offered 0% APR for the first 6, 12 or 18 months. 

Once this period ends, you may be charged a higher interest rate, but if you can clear your balance during that intro period those extra interest charges won’t matter.

How Balance Transfers Work

Balance transfer credit cards are used by credit card companies to attract new users. These introductory offers convince you to move your balance to a new credit card company, after which they hope you will continue to make purchases, accumulate debt, and remain with them for years to come.

Most balance transfer credit cards charge a fee for moving the money across. This fee is often levied as 3% or 5% of the total balance, which equates to $300 or $500 for a balance of $10,000. 

That sounds like a lot, but it also comes with a 0% APR, which means your monthly payments will go exclusively towards the principal, paying it off quickly.

Usually, the majority of your minimum payment goes towards interest, which means your balance will decrease slightly with each passing month. By removing this interest obligation from the equation, all your payment will go towards the balance, thus clearing it quickly and cheaply. 

These cards can save you thousands of dollars if used properly, but it’s important not to swap an older problem for a new one; not to create the same issues on your new card that you had on your old card.

Use a balance transfer offer to remove the balance entirely. Meet the minimum payment, pay more where possible, and ensure that when the introductory period ends, there is no balance on which interest can build. Once you reach this point, you’ve wiped the slate clean and can start afresh, making credit card payments on time and clearing your balance in full every month.

Many balance transfer credit card offers come with a $0 annual fee and don’t charge you for foreign transactions. However, they typically won’t provide you with the sort of cashback rewards you can get from other credit cards.

Paying Off a Credit Card with Bad Credit

If you have bad credit, you may struggle to find a balance transfer card with a high enough credit limit. These cards, like all good credit cards, require a relatively clean credit report, preferably with a credit score above 670.

As long as your credit score is above 580, you’ll still options, but those options may be limited to high-interest rates and unfavorable terms. In such cases, there are a few things you can to clear your credit debt:

1. Improve Your Credit Score

A balance transfer fee is the only real downside to a balance transfer credit card, so it’s worth putting the time and effort in to get one of these cards. It may only take a few months to improve your credit score to a point where you can apply for one of these cards.

Take a look at the best balance transfer credit cards (Discover, Visa, Chase) to give you an idea of the sort of card that can help you and the type of credit score you need. Once you have that target in mind, you can work towards achieving it.

2. Credit Counseling

A credit counselor can look at your current financial situation and determine the best course of action going forward. These services are offered by many credit counseling agencies and you typically only need to pay a token amount for a short 30- or 60-minute session.

3. Debt Consolidation

Debt consolidation is very similar to a balance transfer, as it swaps one or more smaller debts for a big one. The difference is that it pays the credit card balances off with a single loan, and you then focus on repaying that loan.

Typically, debt consolidation extends the length of your loan with a view to reducing the monthly payments but increasing the total balance. This can help to make your credit card debt more manageable and it will also improve your debt-to-income ratio.

4. Debt Settlement

Debt settlement is one of the cheapest ways to clear credit card debt. It begins when a debt specialist requests that you stop meeting all monthly payments and then move your money to a separate bank account. 

The debt specialist will then use this bank account to negotiate with your creditors, waiting until they desperate to settle and then offering them a greatly reduced settlement sum.

Just bear in mind that when you miss a minimum monthly payment, you run the risk of your account defaulting, which will hurt your credit score.